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In a significant move to facilitate its expansion, Herc Holdings Inc., a leader in equipment rental and leasing services, amended its senior secured asset-based revolving credit facility to support the acquisition of H&E Equipment Services, Inc. This development, confirmed on Monday, March 11, 2025, allows the company to proceed with its previously announced purchase of all issued and outstanding shares of H&E Equipment Services’ common stock.
The amendment, known as the Third Amendment, was entered into with Bank of America, N.A., as agent, along with other financial institutions. It modifies the existing credit agreement dated July 31, 2019, which had already been amended twice before, on July 5, 2022, and April 11, 2024. The latest changes permit Herc Holdings to incur additional indebtedness and related liens under the credit agreement specifically for the H&E Acquisition.
Herc Holdings, which trades on the New York Stock Exchange under the ticker (NYSE:HRI), has not disclosed the financial terms of the amendment. However, the full text of the Third Amendment is available as Exhibit 10.1 in the company’s latest 8-K filing with the SEC. The company has demonstrated strong financial performance with an EBITDA of $870 million in the last twelve months, though InvestingPro analysis indicates the stock is currently trading below its Fair Value. Investors can access detailed valuation metrics and 10+ additional expert insights through InvestingPro’s comprehensive research reports.
The strategic acquisition is expected to strengthen Herc Holdings’ position in the market by expanding its equipment rental portfolio and service offerings. The company, with its headquarters in Bonita Springs, Florida, operates under the name Herc Rentals Inc. and its subsidiaries, including Matthews Equipment Limited.
This move is part of Herc Holdings’ broader growth strategy and demonstrates the company’s commitment to enhancing its services and market reach. The information regarding this credit facility amendment is based on the latest SEC filing by Herc Holdings.
In other recent news, Herc Holdings Inc. reported its fourth-quarter 2024 earnings, revealing an earnings per share (EPS) of $3.58, which fell short of the anticipated $3.94. However, the company exceeded revenue expectations with $951 million, showcasing strong sales performance despite the EPS miss. Herc Holdings announced a definitive agreement to acquire H&E Equipment Services Inc. for $5.5 billion, a move expected to significantly increase its debt load, which led S&P Global to revise Herc’s outlook from stable to negative. The acquisition, primarily funded through debt, was also deemed credit negative by Moody’s, although they maintained a stable outlook on Herc’s Ba2 corporate family rating.
The merger agreement with H&E Equipment Services is valued at $104.89 per share, including both cash and stock components, and is anticipated to result in $300 million of run rate EBITDA synergies by the end of three years post-closing. Barclays (LON:BARC) expressed optimism about the strategic acquisition, despite market concerns about integration risks and costs. The transaction is expected to enhance Herc’s position as the third-largest rental company in North America, with projected annual cost synergies of over $125 million and an EBITDA impact of about $175 million from revenue synergies in the initial years. The acquisition is subject to regulatory approvals and is anticipated to close mid-2025.
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